COLUMBIA, S.C. (AP) _ A manufacturer's office space can be taxed at a higher, industrial rate even if the offices are separated from the plant by a road, according to a state Supreme Court ruling released Monday.
In the case involving Hartsville-based packaging company Sonoco Products Co. and the state Revenue Department, the court rejected Sonoco's 1997 claim that its office building and order call center should be taxed at the lower 6 percent commercial rate.
Industrial property is taxed based on an assessment rate of 10.5 percent, but state law gives manufacturers a break on property taxes on office buildings that are "used or leased for purposes clearly unrelated to manufacturing," the court said.
The high court said there are several instances in state law in which the Legislature says explicitly that an intersecting road does not separate two pieces of property owned by the same person or company.
Sonoco was seeking the lower rate and a refund of $866,580 for taxes paid on its headquarters operations. The company pays $2 million to $3 million a year in property taxes to Darlington County and the higher assessment rate on the office buildings cost the company about $150,000 a year, Sonoco spokesman Roger Schrum said Monday.
He said the company is disappointed with the ruling. A spokesman for the Revenue Department said the agency was reviewing the ruling and would have no comment Monday.
"Unfortunately, it makes it extremely difficult for Sonoco to consider expanding its Hartsville operations because of the punitive tax structure that the company faces," Schrum said.
In 2003, the state Revenue Department rejected Sonoco's written protest over the higher assessment rate and Sonoco appealed to an Administrative Law Court, which also sided with the agency.
Sonoco appealed again in Circuit Court in Darlington County, where the company won. The Revenue Department appealed that decision to the state Court of Appeals and the Supreme Court took over the case.
Schrum said the Hartsville manufacturing operations are a small part of its worldwide production, which includes 330 plants in 35 countries. All of those operations are supported by corporate headquarters.
Among the arsenal of incentives the state uses to bring companies to the state is a negotiated fee that companies can pay to counties instead of property taxes. That incentive doesn't affect Sonoco, which has been in Hartsville 109 years, Schrum said.
"I think this is more of a glitch so to speak in tax law how it's impacting a veteran company versus maybe one that's coming in to bring in news jobs," he said.
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On the Net: Sonoco Products Co. v. SC Revenue Department: http://www.judicial.state.sc.us/opinions/displayOpinion.cfm?caseNo=26502
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